Welcome to the Era of Regenerative Finance

By Jasper van Brakel

Our complex, systemic problems are proving resistant to simple solutions, and each one has its own web of complexities to unwind. One thing they all have in common, though, is that you can’t fix a broken [name any system] with a broken finance system. That’s why regenerative finance — a concept that’s been percolating at the edges of impact investing and sustainable business since at least 2015, when John Fullerton laid out the principles of regenerative economics — is emerging as an essential strategy.

Simply put, regenerative finance uses money as a tool to solve systemic problems and regenerate communities and natural environments. Its goal is to heal and create shared value. Profits are not the end, but rather a means to further progress. In regenerative finance, circulation replaces accumulation.

Conventional finance approaches are too myopic to fully address the systemic failures we’re facing. The growing adoption of environmental, social and governance (ESG) factors in investing is a positive trend; but it’s mostly about reducing negative impacts. Even investment strategies aimed at achieving positive net impact tend to focus on a narrow set of targets, and they often neglect to consider how outcomes are created and who benefits. Most banking and lending practices still ignore social and environmental impacts. In philanthropy, while grantmaking is dedicated to solving problems, the typical process maintains skewed power relationships in ways that block access to innovative ideas and reinforce social disparities. And foundations often invest the vast majority of their assets in ways that undermine their mission.

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